Net Lease News

B+E Weekly Newsletter

June 20 – June 26, 2023

MARKET

POWELL OUTLINES INTEREST RATE PLANS TO CONGRESS | GlobeSt

In the Federal Reserve’s semiannual report to Congress, Chair Jerome Powell’s advanced published comments reinforced the between-the-lines takes that many had after June’s meeting of the Federal Open Market Committee.

The Fed understands the hardship that high inflation is causing, and they remain strongly committed to bringing inflation back down to their 2 percent goal.

Over the 12 months ending in April, total personal consumption expenditures (PCE) prices rose 4.4 percent; excluding the volatile food and energy categories, core PCE prices rose 4.7 percent.

In May, the 12-month change in the consumer price index (CPI) came in at 4.0 percent, and the change in the core CPI was 5.3 percent. The process of getting inflation back down to 2 percent has a long way to go.

UNDERSTANDING THE CREDIT SPREAD EFFECT ON CRE VALUATIONS | GlobeSt

• For CRE, watching bond spreads can offer insights otherwise unavailable. In some ways, the information is far more extensive.
• Shifts in credit spreads serve as a more immediate indicator. It’s faster to react to news, so looking at credit spreads in addition to macroeconomic fundamentals is important when understanding the forces that are driving prices in both listed and private real estate deals.
• Investors should be aware that rising spreads have different effects in CRE, depending on the property category. Hotels, malls, and offices feel a bigger impact, while less economically-sensitive sectors such as manufactured homes, towers, and data centers are less sensitive.

RETAIL

BURGERFI CEO UNVEILS ENERGETIC PLAN OF ACTION | QSR

• As of April, BurgerFi had 112 restaurants, including 85 franchises and 27 corporate units. The goal this year is to open 15-20 franchised locations after debuting 11 units in 2022.
• The brand currently has 60 company-owned locations. Operator NDM Hospitality will start by opening a co-branded Anthony’s and BurgerFi location in Kissimmee, Florida.
• The next stores will be standalone but with a slimmer prototype. Anthony’s is typically around 3,200 square feet, but these newer franchised outlets will be around 2,000-2,200 square feet with more than 60 dining room seats and a bar.

SHAQ’S BIG CHICKEN HEADED TO NEW JERSEY | QSR

• Big Chicken, the star-powered fast casual chicken concept founded by legendary Hall of Famer and New Jersey native, Shaquille O’Neal, announced today that they have signed an agreement to bring six locations to New Jersey.
• The newest franchise agreement in the Middlesex County area will add to the 250-plus locations in development nationwide for the brand. Big Chicken currently has locations open in Las Vegas, Los Angeles, Seattle, Houston, Arizona, New York, and more. 
• Ideal franchisees are multi-unit operators who trust and understand the established system Big Chicken has in place and have the capital to open several units. With significant interest from new owners, franchise investors will have the advantage to join a brand on the cusp of worldwide expansion.

ZAXBY’S DEBUTS FRANCHISE RESTAURANT IN ALABAMA | QSR

• The chain on Wednesday unveiled its first franchised-owned location without a dining room. Owned and operated by Chicken Scratch Holdings, Inc., the Hoover, Alabama, store opened a 2,000-square-foot venue, which is roughly two-thirds the size of a core-model Zaxby’s.
• Zaxby’s debuted the to-go-only model last year in Memphis, Tennessee. It opened another, in Clemson, South Carolina, in early 2023. But unlike the Hoover store, both were corporate run.
• Zaxby’s has gone from 662 locations in 2014 to 922 in 2022 and looks forward to more expansion. U.S. systemwide sales has gone from $1.2 Billion in 2014 to $2.3 Billion in 2022.